Even small commodity fluctuations can have a substantial impact on restaurants. Take Chipotle, one among thousands of restaurant brands where guests expect to find avocados. Aaron Allen & Associates reported that in 2017, surging demand for avocados, paired with smaller crops in Mexico and California, had analysts predicting that every 10-percentage-point increase in avocado prices would lower Chipotle’s earnings-per-share by 30 cents on an annual basis. And that was for just one ingredient. Developing a plan to track global shortages and surpluses can help you avoid similar scenarios. Restaurant Nuts recommends several strategies: When you plan promotions to bring people in, make sure the items you promote are those whose ingredients are more widely available and profitable. During periods when producer costs are stable, anticipate times when they may fluctuate and build in incremental price increases early so you can maximize your profitability and avoid shocking guests with price surges. Cost out your menu. Add items that don’t use volatile commodities, and for popular but less profitable items, identify areas where you can easily make substitutions. Mine your data so you understand your most popular menu items and pairings, then design your menu and promotions so you direct guests to those items. Securing long-term contracts with suppliers can help you weather potential market fluctuations. Where this isn’t possible, you can always tell your guests about the challenge (without overusing this tactic). If a major hurricane wipes out a crop of an important ingredient you feature on your menu, for instance, guests are likely to understand if you’re transparent about why that ingredient is temporarily unavailable — and what appealing item you’re offering in its place.
In the first quarter of this year, 46 percent of consumers who ordered Uber Eats in the U.S. also ordered from one of its competitors, according to the data research firm Second Measure. That’s despite these companies offering incentives to keep customers coming back. As a result, Vox reports, third-party delivery companies are currently engaged in a price race to the bottom. But before long, these companies won’t be able to continue their streak of losses and will need to charge higher prices. Their relationships with partner restaurants and customers will be all the more critical. As vendors risk getting weeded out, restaurants may wield some leverage.
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